We've probably all heard the statistic that Bitcoin (BTC 0.21%) uses more energy than some countries. While that is true, there are noteworthy innovations taking place that could help ease the cryptocurrency's shaky environmental track record.
To run their powerful computers 24 hours a day, Bitcoin miners are incentivized to look for the cheapest and most accessible forms of energy. Traditionally, this has been electricity. While there are signs that Bitcoin miners are starting to use renewable energy sources such as wind or solar, another candidate is slowly gaining momentum as a viable alternative that could not only increase miner profitability but also minimize greenhouse gas emissions.
A new way to fuel miners
In an analysis published this month by Cathie Wood's ARK Invest, Sam Korus, its director of research for autonomous technology and robotics, explored the possibilities that harnessing excess methane gas emitted from natural gas drilling could make Bitcoin mining cheaper. Korus points out that not only would it make mining more profitable, but it would also clean up an industry plagued by pollution.
The oil and gas industry spews roughly 265 billion cubic meters (bcm) of natural gas emissions into the atmosphere every year. Around 140 bcm of these emissions are burned into less harmful carbon dioxide. The remaining 125 bcm are left in their more destructive form as methane and emitted directly into the atmosphere.
Korus suggests that Bitcoin mining could help alleviate the oil and gas industry's methane problem by converting the vented methane emissions into electricity. His research suggests that about 25 bcm of methane would be needed to support Bitcoin's current power consumption. While this is only 20% of emitted methane, it represents a significant reduction when considering that methane is about 120 times more toxic than carbon dioxide.
Not only would this eliminate the amount of methane entering the atmosphere, but it would also increase the profitability of miners. With the help of natural gas generators that can be set up on-site, electricity can be created from gas that would have been otherwise simply wasted, making miners' energy source cheap and cost effective.
CRYPTO: BTC
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Big oil has entered the chat
Some oil and gas companies have already started to test Korus's theory. Earlier this year, ExxonMobil (XOM 2.23%) made headlines when it said that it was setting up Bitcoin mining equipment at its facilities in North Dakota. While it might be able to generate some income from successfully mining Bitcoin, the company claimed that its ultimate reason for making the move was to eliminate emissions.
And so far, it looks as if it works. By running Bitcoin mining on-site, Exxon found that emissions were reduced by 63% compared to just spewing methane into the atmosphere.
How Bitcoin benefits
The past couple of years have been problematic for Bitcoin and the environment. Recent criticism of the crypto has been heightened by allegations about its high energy consumption from people such Elon Musk, while the state of New York has banned all Bitcoin mining that runs on carbon-based energy.
But promising developments like the one above show that the world's first cryptocurrency can rewrite an energy-guzzling narrative that has put it in the crosshairs of environmentalists. If Bitcoin miners continue to use innovative energy sources that are more environmentally friendly, it could change the public perception of the cryptocurrency.
The beauty of this is that when there are more Bitcoin miners, it becomes more decentralized and more secure. These two features are some of the primary characteristics that have attracted investors over its history. Should the digital currency become even more decentralized and more secure, it's plausible that it could keep attracting money from investors and continue its upward trend.
